Monday, August 09, 2010

Reform or remove the food safety net in India?

A recent study has shown that India has more hungry people than 26 African nations combined. The inability of the government to feed people through its food distribution system has opened a debate of reforming the system or moving to a market-based solution

From this excellent New York Times article that we found at the Honolulu Star Advertiser, writer Jim Yardley tells us more about the debate and Sonia Gandhi efforts to change the system.

For the governing Indian National Congress Party, which has staked its political fortunes on appealing to the poor, this persistent inability to make government work for people like Bhuria has set off an ideological debate over a question that once would have been unthinkable in India: Should the country begin to unshackle the poor from the inefficient, decades-old government food distribution system and try something radical, like simply giving out food coupons, or cash?

The rethinking is being prodded by a potentially sweeping proposal that has divided the Congress Party. Its president, Sonia Gandhi, is pushing to create a constitutional right to food and expand the existing entitlement so that every Indian family would qualify for a monthly 77-pound bag of grain, sugar and kerosene. Such entitlements have helped the Congress Party win votes, especially in rural areas.

To Gandhi and many left-leaning social allies, making food a universal right would ensure that people like Bhuria are not deprived. But many economists and market advocates within the Congress Party believe the delivery system needs to be dismantled, not expanded; they argue that handing out vouchers would liberate the poor from an unwieldy government apparatus and let them buy what they please, where they please....

The food system has existed for more than half a century and has become riddled with corruption and inefficiency. Studies show that 70 percent of a roughly $12 billion budget is wasted, stolen or absorbed by bureaucratic and transportation costs. Gandhi's proposal, still far from becoming law, has been scaled back, for now, so that universal eligibility would initially be introduced only in the country's 200 poorest districts, including here in Jhabua, at the western edge of the state of Madhya Pradesh.

With some of the highest levels of poverty and child malnutrition in the world, Madhya Pradesh underscores the need for change in the food system. Earlier this year, the official overseeing the state's child development programs was arrested on charges of stealing money. In Jhabua, local news media recently reported a spate of child deaths linked to malnutrition in several villages. Investigators later discovered 3,500 fake food ration booklets in the district, believed to have been issued by low-level officials for themselves and their friends....

Many social advocates, suspicious of market solutions, say that such reforms prove that the system can be improved. But pro-market advocates say that issuing either food coupons or direct payments would circumvent much of the corruption and allow recipients more mobility and freedom of choice. They point to the eventual creation of a new national identity system - in which every person will have a number - as a tool that can make such direct benefits possible.